Technical Analysis – GER30 index bullish bias back on track


Anthony Charalambous, XM Investment Research Desk

GER30 stock index bulls pushed above the 12,985 previous high from October 28, realigning the index with the short-term positive picture. Further backing the positive momentum is the fresh bullish crossover of the upward sloping Tenkan-sen and Kijun-sen lines and the price distancing itself above the Ichimoku cloud.

The MACD, still in the positive zone, is increasing above its red trigger line, supporting the positive view. The upward sloping RSI has ascended into the overbought territory, also supporting further advances. Furthermore, concurring with the outlook is the upward sloping 50-, 100- and 200-period simple moving averages (SMAs).

If buying interest continues above the fresh sixteen-month high of 13,150, the bulls could initially encounter a resistance region of previous peaks of 13,185 and 13,205, from June and May 2018 respectively. Overcoming these swing peaks, the index could push higher again to test the 13,350 resistance ahead of the swing high of 13,410 from January 29, 2018.

If the sellers manage to reverse the price back down, initial support could come from 12,985, where the Tenkan-sen line is also located. Moving lower, the 50-period SMA and the upper band of the Ichimoku cloud, around 12,906, could apply upside pressure. Further down, the 100-period SMA around 12,755 could interrupt the test of the trough of 12,650 from October 23. Even lower, a key durable support at 12,500, where the 200-period SMA also resides, could challenge the bears.

In brief, the short-term bias is bullish above 12,650. However, a shift below 12,500 would turn the index’s bias to bearish.